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because they can sell 10k of software upgrades? Tesla is worth like 700/share in 4 years if everything works out with their factories and expansion. If they hi

by useful 6y ago

because they can sell 10k of software upgrades? Tesla is worth like 700/share in 4 years if everything works out with their factories and expansion. If they hit the lottery and magically figure out self driving, then they will 2x-3x, because they can have better than software company margins. I don't fault the crowd for thinking they will have self driving cars in a few years. I don't see it really happening outside of a few really well managed cities.

xyzzyz 6y ago
And Toyota can sell higher "trim" version of their vehicles, which also has extremely good margins (as higher trim are not significantly more expensive to manufacture than base, just like software upgrades). But the issue is not about margin on some specific upsell, rather the question is about the entire margin on the whole business. Can Tesla make as good or better cars as competition for lower prices, and keep this advantage for a while? Very much possible. Will their advantage be 10x, like the current market cap suggests? In my opinion, highly unlikely.
- useful 6y ago
  I have no idea. But you can also sell an aftermarket 10k upgrade of "trim". I don't think toyota can offer that. I don't think the bull case is very strong. But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. I would describe myself as bearish on their self-driving future as something I could trust to sleep or do work in. The recent videos are impressive and exciting. I hope they succeed.
  - xyzzyz 6y ago
    Of course Toyota could offer that. There are plenty of independent car shops that will do all kinds of stuff to your ride, from visual trim replacement, repainting, mechanical tuning, engine swaps, aftermarket parts etc etc. Toyota doesn't bother, because there isn't much money in it. An independent tuning shop can make $1M/year in revenue, and a thousand of such shops can make a total of a $1B. But $1B/year of extra revenue is paltry change for Toyota. Anyone can offer 10k aftermarket upgrade, but the real question is how many will buy it. > But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. Yes, I'm very bullish on Tesla, mostly because I have great trust in Musk's ability to run business. However, my bullishness doesn't extend to valuing Tesla today more than next five of biggest auto makers combined.
itsoktocry 6y ago
>because they can sell 10k of software upgrades? Maybe, depending on what those features do. But all you are doing is moving the car into a higher market segment, with fewer potential buyers. Other manufacturers do this, too.
xkjkls 6y ago
How many people are buying a software upgrade for their car that is worth close to a new car? None of this scales outside of Tesla's small incredibly wealthy customer base.

by useful 6y ago

xyzzyz 6y ago

And Toyota can sell higher "trim" version of their vehicles, which also has extremely good margins (as higher trim are not significantly more expensive to manufacture than base, just like software upgrades). But the issue is not about margin on some specific upsell, rather the question is about the entire margin on the whole business. Can Tesla make as good or better cars as competition for lower prices, and keep this advantage for a while? Very much possible. Will their advantage be 10x, like the current market cap suggests? In my opinion, highly unlikely.

useful 6y ago
I have no idea. But you can also sell an aftermarket 10k upgrade of "trim". I don't think toyota can offer that. I don't think the bull case is very strong. But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. I would describe myself as bearish on their self-driving future as something I could trust to sleep or do work in. The recent videos are impressive and exciting. I hope they succeed.
- xyzzyz 6y ago
  Of course Toyota could offer that. There are plenty of independent car shops that will do all kinds of stuff to your ride, from visual trim replacement, repainting, mechanical tuning, engine swaps, aftermarket parts etc etc. Toyota doesn't bother, because there isn't much money in it. An independent tuning shop can make $1M/year in revenue, and a thousand of such shops can make a total of a $1B. But $1B/year of extra revenue is paltry change for Toyota. Anyone can offer 10k aftermarket upgrade, but the real question is how many will buy it. > But I do think the previous bear cases of "they cant run a factory", "they cant scale production", etc are all mostly disproven. Yes, I'm very bullish on Tesla, mostly because I have great trust in Musk's ability to run business. However, my bullishness doesn't extend to valuing Tesla today more than next five of biggest auto makers combined.

itsoktocry 6y ago

>because they can sell 10k of software upgrades? Maybe, depending on what those features do. But all you are doing is moving the car into a higher market segment, with fewer potential buyers. Other manufacturers do this, too.

xkjkls 6y ago

How many people are buying a software upgrade for their car that is worth close to a new car? None of this scales outside of Tesla's small incredibly wealthy customer base.